“In 1940 and 1941 the economy was recovering smartly from the Depression, but in the latter year the recovery was becoming ambiguous, as substantial resources were diverted to war production. From 1942 to 1944 war production increased rapidly. Although there is no defensible way to place a value on the outpouring of munitions, its physical dimensions are awesome. From mid-1940 to mid-1945 munitions makers produced 86,338 tanks; 297,000 airplanes; 17,400,000 rifles, carbines, and sidearms; 315,000 pieces of field artillery and mortars; 4,200,000 tons of artillery shells; 41,400,000,000 rounds of small arms ammunition; 64,500 landing vessels; 6,500 other navy ships; 5,400 cargo ships and transports; and vast amounts of other munitions. Despite countless administrative mistakes, frustrations, and turf battles, the command economy worked. But, as always, a command economy can be said to work only in the sense that it turns out what the authorities demand. The U.S. economy did so in quantities sufficient to overwhelm enemy forces.” (Higgs 1992).That is correct.
But who is the author of this passage? Some “statist”?
It is none other than the libertarian Robert Higgs, who is cited ad nauseam by other libertarians, but I doubt whether many bother to cite this passage. (As an aside, I have a sneaking admiration for Higgs for reasons which I will perhaps explain in another post.)
Now once it is understood that command economies were mostly run on the basis of “planners’ sovereignty” and not “consumer sovereignty,” the debate about whether command economies “work” either in a theoretical and empirical sense becomes much more interesting than the tired and grossly exaggerated themes of Mises’s Socialist Calculation Debate.
Some command economies failed. Others have succeeded. The former communist states like the Soviet Union did not operate their economies on the principle of “consumer sovereignty.” These were command economies with production decisions by planners. If one assumes that the output of the command economy is planned by administrators by their own designs, then one will have to measure the success of their planning by whether the output produced did actually match their plans.
The Western command economies during WWII in America, Canada, the UK, Australia and New Zealand were very successful indeed: they more or less produced what was planned and won the war for Western democratic civilisation.
Higgs, Robert. 1992. “Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940s,” Independent Institute, March 1